FCA platform paper due in tomorrow

SnowMan

FT adviser and other websites are reporting that the long awaited FCA platform paper may be published tomorrow.

Will be interesting to see what is in that.

xylophone

Will be interesting to see what is in that.

Yes indeed - I am waiting for HL's response.

dunstonh

The FCA paper has less relevance now that HMRC are taxing rebates. That more than anything has forced the hand of the platforms.

grizzly1911

dunstonh wrote: »

The FCA paper has less relevance now that HMRC are taxing rebates. That more than anything has forced the hand of the platforms.

Can you expand?

Rollinghome

Some of the details here http://www.ftadviser.com/2013/04/26/investments/wraps-and-platforms/fca-bans-all-platform-rebates-introduces-sunset-clause-SDxiytjIOYDRfww2ywt9MP/article.html

Including: The Financial Conduct Authority has confirmed it will ban platform cash rebates from April 2014, with all legacy business also required to move away from rebates after a further two-year grace period ending in 2016.

dunstonh

Everything seems quite logical and sensible. Perhaps the only thing thing that surprised me was the requirement that legacy business will have to move to unbundled basis. Some of the platforms (mainly DIY) had been aggressively building funds at a short term loss to try and get as much on platform before the changes. Maybe that was why the FCA decided to include legacy.

This will require most of the DIY platforms that have no already moved to full unbundled basis to do so. We saw the forum coverage when iii moved to unbundled. It will be interesting to see how the remaining bundled platforms handle the move.

grizzly1911

Will unit trust providers have to offer a deal direct service on an unbundled, no intro fee basis or will you have to deal through a platform?

Will it be necessary to pay a fee if you are happy to have x number of strands to manage yourself?.

westy22

HL have now issued a statement (not that it tells us much that we didn't already know!) http://www.hl.co.uk/news/articles/what-does-the-fcas-platform-paper-mean-for-you

Their briefing paper indicates that most clients will end up paying the same or less than they do now - well, we'll have to wait and see later in the year.

dunstonh

Will unit trust providers have to offer a deal direct service on an unbundled, no intro fee basis or will you have to deal through a platform?

Expectation is direct will still use the retail annual management charge and initial charge.

Will it be necessary to pay a fee if you are happy to have x number of strands to manage yourself?.

Yes. Although you already are. You just dont know it in many cases.

HL have now issued a statement (not that it tells us much that we didn't already know!) http://www.hl.co.uk/news/articles/wh...r-mean-for-you

quote: "As we have always done, we will use our buying power to negotiate the best deals we can for our clients." - the whole point of clean share classes as the investment costs the same across the board. Nothing to negotiate. Even if they want to negotiate, they say "the Vantage Service is the UK's largest direct investment platform by a significant margin. " - although behind a number of the IFA platforms. Certainly a big player but not the biggest. So, you can look at the pricing of IFA platforms as an indication of what is likely on the DIY side.

Their briefing paper indicates that most clients will end up paying the same or less than they do now - well, we'll have to wait and see later in the year.

In theory, they should be paying less on managed funds (as currently they are keeping commissions that are typically used to pay for advice - no advice = no charge). Tracker funds will be more expensive. There should be no differential between managed and trackers.

Totton

Useful link -

http://www.hl.co.uk/__data/assets/pdf_file/0012/6955923/Client-Guide-to-the-Platform-Paper.pdf

Perelandra

http://www.fca.org.uk/news/platforms-industry

Interestingly this states:

The FCA is making changes to ensure that investors can make fully informed choices if they wish to use a platform and understand what they are paying for the service the platform provides. These changes include:

• making the cost of the platform service clear to investors by ensuring that the platform service is paid for by a platform charge which is disclosed to and agreed by the investor
• banning cash rebates for non-advised platforms to prevent these payments being used to disguise the costs of the platform charge

So unit rebates will still be allowed?